Watkin Jones (WJG) Trading Update summary

FY24 trading performance

• Sale of a major PBSA development in Stratford, London completed, but overall market activity was slower than expected due to uncertainty over interest rate cuts.

• Adjusted operating profit for FY24 is expected between £10m and £12m, a significant increase from FY23's £0.2m.

• Gross cash at year-end anticipated at approximately £80m and net cash at £65m, both ahead of previous expectations.

• Operational objectives progressed, with the Refresh initiative gaining traction and two further practical completions expected.

• No change in the exceptional provision for remedial works for legacy properties.

Outlook and strategic initiatives

• UK interest rate cut in August 2024 and expected future cuts should improve forward fund liquidity.

• Fewer transactions in FY24 will impact FY25 results, as schemes not forward sold will not contribute to future revenue.

• Several schemes are planned to go to market in FY25, but a more prudent approach to transaction assumptions is being adopted.

• Medium-term market fundamentals remain strong, supported by rental and student property shortages and positive government commentary.

• Progress made in diversifying earnings through initiatives like Refresh and exploring alternative transaction structures.

Financial position and funding

• Strong net cash position provides a solid base for committed spending but limits ability to fully exploit market opportunities.

• Board is reviewing options to enhance medium and long-term funding to capitalize on market recovery.

• Actively seeking to expand the long-term pipeline, with increasing opportunities in the land market.